Thailand consumer goods

Consumer confidence hits three-year high

February 7th 2018 | Thailand | Retail

Event

According to data released on February 5th, the consumer confidence index (CCI) compiled by the University of the Thai Chamber of Commerce rose for a sixth consecutive month in January, to 80 points, from 79.2 in December.

Analysis

A positive CCI trend of this duration has not been seen for many years; it has been driven to a large degree by consumers' expectations for their own situations and the wider economy. Respondents' views on the present situation in terms of the economy and jobs continued to improve from the previous month in January, but at a slower rate. The "expected economic situation" has been on a moderate upward trend since mid-2016, reflecting the gradual firming of GDP growth since the start of that year.

Notwithstanding the apparent improvement in households' willingness to spend, economic fundamentals still lend little support to a jump in private consumption in the short term. Average nominal monthly wages rose by just 0.1% year on year in the fourth quarter of 2017, and declined by 0.1% in that year as a whole. Household debt has slowly decreased as an equivalent share of GDP since 2015, but it remains relatively high. Loans to households from financial corporations stood at 78.4% of GDP at end-September (the latest available data), down only slightly from a high of 81.2% reached at the end of 2015. We thus expect only a moderate acceleration of private consumption growth in 2018 compared with last year.

Impact on the forecast

Our estimate that private consumption grew by 3.3% in 2017 remains appropriate. We are raising our private consumption forecast for 2018 from 2.9% to 3.5%, on the back of a broader firming of economic activity, and the latest CCI reading supports this expectation.